Warner Bros. Discovery is moving its local operations to smaller offices in Bellevue as the media giant looks to cut costs amid what its CEO called "generational" disruption, as traditional media companies push hard on streaming.
The media and entertainment giant reported that it leased 48,000 square feet at Bellevue’s Civica Office Commons for its direct-to-consumer unit that includes HBO, Max and the Discovery Plus streaming service, according to its annual report filed Feb. 27.
Warner Bros. Discovery's lease of 112,000 square feet at Hill7 in downtown Seattle, where the company opened offices for HBO in 2015, is set to expire in May.
The move comes as companies such as Zoom, TikTok and Walmart have signed big office deals in Bellevue, even as downtown Seattle, along with other big cities, has been slow to recover since the COVID-19 pandemic upended commercial property markets in 2020.
Downtown Seattle's office vacancy rate has hovered around 30%. Downtown Bellevue, meanwhile, has a vacancy rate of just under 13% and is the Puget Sound region's best-performing office submarket, according to CoStar Analytics.
The move also comes as Warner Bros. Discovery, like its media rivals, is experiencing disruption as it transitions from traditional linear TV to streaming services.
Media cost-cutting
The company on Feb. 27 posted a loss for the fourth quarter as revenue declined amid $1.9 billion in restructuring expenses, according to a company earnings release last month.
Despite the challenges, Warner Bros. Discovery added 4.6 million subscribers to its streaming outlets in the quarter. The company expects streaming profits to double this year as it cuts costs and rolls out a global expansion of its flagship Max service, according to the earnings report.
"Max continues to grow at a powerful pace, and we expect it to continue throughout 2025 and beyond," CEO David Zaslav told analysts in the company's earnings call. "In this generational media disruption, only the global streamers will survive and prosper, and Max is just that."
Bloomberg News reported last month that Warner Bros. Discovery was closing its Monolith Productions video game operations based in Kirkland, near Bellevue, along with two other video game studios in San Diego, to boost the profitability of the company’s interactive entertainment business.
Warner Bros. Discovery is laying off 131 workers at Monolith’s Kirkland studio by April 26, according to a state worker adjustment and retraining notification.
The company did not respond to requests for comment on when it plans to move into the Bellevue space or whether it intends to maintain offices in Seattle.
CoStar data shows The Broderick Group brokerage is marketing the media company's 112,222 square feet of space on the eighth through 11th floors in Seattle's Hill7 as being available on June 1.
Warner Bros. Discovery first announced plans in early 2022 for new offices for its direct-to-consumer business unit in Bellevue, according to a filing.
Bellevue city records show that the building department issued permits to Warner Bros. Discovery in October and November for tenant improvements across the second and third floors at Civica Office Commons.
The work includes new flooring and finishes and reconfiguring the spaces to accommodate meeting rooms.